In the aftermath of Microsoft’s u-turn after the backlash against the Xbox 360’s new features, some things start becoming apparent.

Microsoft had the right idea, but it got executed poorly, and handled worse. They wanted to go for a delivery model for gaming that’s like the current delivery models for apps, and like some movies and books (Netflix, Kindle, etc) – the core idea being that if the audience can switch over to digital-only, or at least a form of digital that might need the multiple-GB game disks acting as the first component of a game that would eventually be much more embedded in a larger virtual ecosystem, allowing for easier, automated updates, upgrades, integrated mod purchases, portability, etc.

Having a game existing entirely and independently on a single DVD opens up the possibility of it being resold, exchanged, gifted, regifted, and yes, copied. Over time, they might have looked at a vision of a world where all purchases and ownership is virtual and linked to identity, and thus cut down on the resale, trade, and exchange markets, turning them into a new customer base. A purely virtual ownership would also allow for more opportunities to cross-sell, upsell, trigger in-game marketing (maybe based on the complex, detailed profile built up of the player).

The vision, it seems, didn’t get completely understood as it moved down the line from strategy to marketing to PR; end result, bad handling of the questions asked and the public’s assumptions made.

But why did the public react the way it did? Look at the expectations going in. The current 360-playing audience expects the next-gen console to be better, more powerful, faster, able to deliver a better gaming experience. And by that, they mean less latency, faster and better graphics, more realism, hardware support for more complex, realistic games, and maybe integration into a virtual ecosystem of add-on content, DLCs, demos, etc.

What they don’t expect, is a new paradigm of gaming delivery. Especially if the competition is delivering exactly what they are expecting. Nothing new, just better old.

What is a new gaming delivery paradigm? Google Play. Steam. Nexus Mods. Stuff the PC Master Race has been playing around with for years, and getting better, more organized. The biggest grouse I have, as a member of this community, is the amount of demand modern gaming places on my system. Hard disk space. RAM. Processor speeds. Graphics accelerators. Gamepads and adapters. Monitor size. Cabinet space. Installation issues. Viruses, trojans, malware. The living room has a good, large TV, sound system, and a nice couch, and it’s where I relax, not work. The computer is secluded, has a smaller screen and an upright chair, and it’s where I work. The living room has wifi, and the TV/console is online. Why should gaming not happen here?

That’s the main reason I bought a console. Easy plug-and-play, no dependency on system resources for work / downloads with a dedicated piece of hardware, and beautifully rendered graphics deserve a beautiful, big screen.

The Valve box is stepping in exactly here. Dedicated hardware that frees up your PC, makes gaming social and relaxed, and gives most of the PC gamer advantages… and console ones. It’s a new paradigm, so it won’t replace either the PC or the console – it’ll be an add-on. And over time, if it delivers on capabilities, it can replace consoles.

You need early adopters for a new paradigm, but console players are not early adopters. They’re followers, and they don’t like disruption, don’t want innovation. They want what they have, but better. Microsoft made the mistake of giving them something new – the mistake of confusing the huge market of 360 users as potential purchasers of the new system. Sorry, they aren’t. The audience you want is not playing the 360, or the PS3, or planning for the PS4. They’re using PCs, running mods, cracked games, constantly upgrading hardware and trying out new concepts. The Oculus Rift will come to PC first, as will Star Citizen. Consoles are a finished, polished product, and expected to perform as such.

Could Microsoft have done this better? Maybe by sticking the equivalent of a Valve box on top of a more powerful, flexible console. Give the masses something to be happy about and also experiment with, until they start using it more, getting used to it… then deliver the actual console. You’ll have a frankenstein console for a while straddling two paradigms, but it’s the only way. You’re trying to compete with both the PS4 (performance) and PC (innovation) – you have to deliver both.

Now it’s up to the Valve box equivalents. Hopefully with usable VR, solid-state drives, fast and easy but optional connectivity, and massively expanded storage coming up very soon, the PC can go ahead into innovation while the consoles follow for the mass audience.